Bush heeds retiree fears

Social Security, pensions are safe, president insists

An issue for fall elections

Stressing reform in wake of Enron, shaky stock market

March 01, 2002|By David L. Greene | David L. Greene,SUN NATIONAL STAFF

WASHINGTON - With Enron's collapse and the shaky stock market leaving many Americans anxious about their retirement savings, President Bush sought yesterday to reassure workers that money put away in pensions and in the Social Security system will be available when they stop working.

"Savings start as an individual responsibility," Bush said. "But government can help by expanding the rewards of saving and by strengthening protections."

His remarks came as Republicans in Congress are pushing to gain political cover on what will likely be a major issue in the fall elections, which will determine control of the House and Senate. Social Security traditionally has been an issue on which voters say they trust Democrats more than they do Republicans.

The ideas the president discussed yesterday are not new. But for the first time, Bush tied them together in a package that he said would bolster retirement "security" - a word he has attached to a slew of his priorities since Sept. 11 to try to highlight their urgent importance.

Bush renewed his call for pension reforms in light of Enron's meltdown, in which many retirement accounts, invested largely in Enron stock, were wiped out.

The president has proposed to allow employees to sell the company stock that employers contribute to retirement accounts after three years. He would also bar company executives from selling their own stock at times when ordinary employees may not do so.

"What's fair on the top floor should be fair on the shop floor," Bush said.

In addition, the president underscored his plan to partially privatize Social Security. If workers were allowed to use some of the money they now pay in payroll taxes to invest in the stock market, he said, their retirement savings could balloon over time.

"At a time when older Americans have longer lives and more options than ever before," Bush said, "we need to ensure they have access not just to a monthly check, but to personal wealth."

A reform of Social Security is widely considered unlikely this election year, especially given that there is no consensus on what changes to enact. But with an eye toward the November elections, Bush and Republicans are trying to inoculate themselves against any attacks over an issue on which their party often feels vulnerable.

Sensing they have the upper hand this year, Democrats say they gladly welcome any debate on Social Security. House Minority Leader Richard A. Gephardt of Missouri suggested that while the Republicans are willing to talk about the issue, they are afraid to engage in serious debate in an election year.

If the House Republican leaders do not bring the issue to the House floor soon, Gephardt said, he will use a parliamentary maneuver to force them to do so.

"Given what the president has said, given what his party members have said, it is time to have this debate," Gephardt said.

Another Democrat, Rep. Robert T. Matsui of California, said yesterday that "the American people deserve a fair and honest explanation of the costs, risks and overall effects of various privatization schemes."

"Right now," said Matsui, the ranking Democrat on the House subcommittee that oversees Social Security, "we are wasting time with meaningless stunts."

Shortly after taking office, Bush appointed a commission to study his idea of allowing workers to set up private Social Security accounts and invest some payroll taxes. The commission returned last fall with three proposals, all of which would require politically sensitive choices. Under all the plans, for example, workers who choose to set up private accounts would receive lower guaranteed benefits at retirement.

Analysts have noted that releasing three proposals offered political shelter to Republicans running for re-election. A single recommendation from the White House might have forced more Republican candidates to take sides on an issue that Democrats could use to attack them.

Republicans face another potential setback, though. Because of the high cost of the post-Sept. 11 recovery and campaign against terrorism, Bush was forced to propose a budget this year that would require dipping into the Social Security trust fund. Last year, both parties had declared the trust fund off-limits.

To guard against criticism from Democrats as the midterm elections near, some Republicans proposed this week to send certificates to all retirees, making clear that neither Bush's proposals nor any reduction in the trust fund would cut their current benefits.

House Majority Leader Dick Armey of Texas, who favors that plan, urged his party to attack Democrats for trying to "preserve the status quo." Armey, who is not seeking re-election, argued that Republicans should not cower on the Social Security issue.

"This debate isn't going to be easy," Armey said. "The demagoguery will be unprecedented, the fear-mongering will be intense, the scare tactics will be extreme. But this time, the debate will be different."

Armey said the certificates would "put members of Congress on record against benefit cuts."

But Jo Anne B. Barnhart, the commissioner of the Social Security Administration and a Bush appointee, dismissed Armey's idea, saying it would take "millions of dollars from the administration's fund that could be used other ways."

Barnhart also told a congressional panel that she feared the plan could cause "undue alarm" for those nearing but not yet at retirement age, because they wouldn't get a certificate.

Yesterday, Alan Greenspan, chairman of the Federal Reserve, stressed that even if the trust fund was depleted, he "cannot imagine a viable political scenario in which full payment of benefits will not be forthcoming."

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